Monthly Archives: August 2015

COPPER: begins a new wave of fall

Copper after short-term upward correction resumed its decline. In part, this was due to renewed decline today in the stock market of China. In addition, the front (September 1) will publish data on business activity in the industrial sector of the country. Preliminary figures were far from disappointing (47.1 – a minimum of 6.5 years) and signaled a deepening recession. If this trend is confirmed, copper may continue to decline at a faster pace. The fact that Celestial red is the largest consumer of the metal in the world. It accounts for about 48% of global demand. And cooling industry can have a significant merger in the dynamics of demand.

In the district level 2.2650 quotes to form a support. His breakthrough could be a good signal for the resumption of sales of metal. With the passage of this mark the number of short positions may increase dramatically, which will send a quotation on down to the nearest target at 2.1900.

copper charts
Copper charts

Trading analytics

Copper (HG) – sell copper – Entry price: 2,2650. Goal: 2,1900. Stop loss: 2,3310.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

Review of August 24-28: whether to resume “Chinese panic”? Forecast for the week August 31 – September 4

Panic selling stock assets on the first working day of the week yet replaced growth. Regulator China has implemented a series of measures aimed at stabilizing the situation in the stock market: lower rates, reserve requirements, liquidity injections carried out. As a result, the indices began to win back drop on Monday. At the end of the week NASDAQ added 3.07% to close Friday. Dow Jones up 1.07%. Hong Kong HSI ended the week with a total of -3.09%, and after failing to fully recover losses incurred earlier. The German DAX 30 (FDAX) recovered in the area of ​​10290.5 level by adding at the end of five days of 2.92%.

Reduced interest in safe assets, coupled with the relatively strong data from the US weighed on precious metals. Against this backdrop, gold (XAU / USD) has fallen in price by 2.32%, silver (XAG / USD) has lost 4.77%. Brent crude oil (BRN) ended the week rising at a rate of 10.11%. Quotations first upgrade at least 6.5 years, down to the level of 42.20, but then played all lost. Additional support for the black gold was at Baker Hughes background data on the number of operating drilling rigs, which this week has fallen by 8 units.

The economic data of the last week:

  • Black Mondayon the stock markets of the world: all the global indices in the red
  • Tuesday . The Bank of China lowered the benchmark lending rate to 4.6% from 4.85% and the deposit rate to 1.75% from 2.0%
  • Wednesday. US: changes in the volume of commercial oil reserves in the vaults of -5.453 million barrels against the forecast of 2.167 million
  • Thursday. US: Q2 GDP 3.7% higher than the forecast of + 3.2%
  • Friday. US August consumer confidence index 91.9 lower than the forecast 93.0

Forecast for the week August 31 – September 4

Stock market
What happened last week has shown that the market is easily inclined to succumb to panic. However, if China’s stock market will continue to demonstrate at least a slow recovery, US indices may be influenced by the American statistics and changes in expectations of Fed rates. A key concern will undoubtedly cause the data on non-farm employment USA. In general, the situation in this sector appears to be quite stable, as well as the state of the US economy (recall that by the end of the 2nd quarter, according to revised data, GDP grew by 3.7% against provisional estimate of 2.3%). This means that the attitude of the Fed to raise rates still looks reasonable.
Therefore, if the number of new jobs exceeded forecasts (214,000), such expectations may again increase. However, against a background of a rapid recovery of the stock market, it’s probably not have a significant negative impact on the US benchmark. So do not exclude the possibility of return of Dow Jones (YM) to the district level 17083, Nasdaq (NQ) can target the rise to the level of 4416.50. Officials of the US Federal Reserve seems to have gone back on their word. Lockhart said that the performance of the economy “is really quite strong“, but the regulator will have to take into account the disturbing signals from overseas economies and the turmoil on financial markets. Stanley Fischer said on Friday that it was too early to talk about what the Fed will do in September. It is possible that some clarity will be the evening of August 29 in the framework of discussions with the deputy head of the Fed’s vice-president of the European Central Bank and the head of the Bank of England at a symposium in Jackson Hole.
At the current stage of the restoration of the Asian indices looks only a consequence of the policy pursued by the Bank of China aimed at maintaining sufficient liquidity. Therefore, as soon as the controller will stop the intervention, which, I must say, it is very expensive, the fall can be resumed, although not as fast as before. The fact is that due to the ongoing weakening of the economy of China, the value of shares of local companies still looks unjustifiably high. Of macroeconomic statistics should pay attention to the data on the index of business activity in the industrial sector in China. If the index will continue to deepen the recession in the region, this can put additional pressure, including on the Hang Seng (HSI). Benchmark may be reduced in the area of ​​level 20700 with the further aim at around 20060.
Commodity and raw market
Brentfound” short-term bottom. Growth of 9%, which is the black gold showed on Thursday, largely was caused by technical factors, though, of course, was the root cause of the positive dynamics of growth of the US economy in the 2nd quarter and the stabilization of the situation in the stock market. Now that the main shock behind oil can exhibit a much more restrained reaction. Although the fact that the quotes were fixed asset above 48.10 dollars per barrel, gives reason to believe that in the near future they will at least stabilize in the range of 45.00 – 55.00. The ability to lift the area of ​​the upper limit of this range is not ruled out. This will be possible under the condition that the United States will continue to decline in production and the number of operating drilling rigs according to oilfield services company Baker Hughes. It is highly desirable and would be a further decline in US commercial inventories. However, given the end of the holiday season, the likelihood of such dynamics is not too high.
Copper (HG) at the end of last week, has developed an upward correction. Quotes of the metal climbed to the district level 2.3420. In many ways, this was due to a reaction to the stimulus measures taken by the Bank of China. The fact that Celestial is the largest consumer of the red metal in the world (about 48% of the total consumption). Nevertheless, fears of further slowdown in the economy remain. So while talking about any change in the trends is not necessary. If the data on the index of business activity in the industrial sector in China would signal a continuation of the recession, copper may decline to renew the district level of 2.1900.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

OIL: at the bottom?

Brent crude oil prices traded in positive territory on Friday, August 28 after a sharp rise the day before the highest rate for the previous six years. The main driver of recovery in favor of strengthening investor optimism about the prospects for the world economy, as well as positive data on commercial stocks in the US underground storage.

World stock indices are actively recovering from sales on August 24 and the Energy Information Agency recorded a significant decrease in business inventories in the United States. Last week they fell by 5.5 million barrels to 450.8 million mark, despite the fact that the holiday season is coming to an end.

Quotes gained about 9% at the end of trading on Thursday and is now corrected. We believe that the trend has reached at least the medium-term lows, and contracts can try to continue the trend to around 50.00. We are looking for shopping opportunities.

oil chart
Oil chart
Trading analytics
Oil brent (BRN) – buy oil – Entry price: 46,00. Goal: 49,10. Stop loss: 44,25.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

S&P 500: Time to buy?

S&P 500 index is back on a growth path after a large-scale sales in the previous two weeks. The depth of the fall observed does not correspond to the quality of macroeconomic statistics, but the movements themselves are largely emotional. In the coming week will be published the latest data on the PMI index in industry, the service sector and the labor market, which can be quite positive and contribute to the growth.

S&P 500 futures managed to gain a foothold above the 50-hour moving average and test resistance around 1960. We believe that they may be of interest to search for long positions in the case of downward correction in the region in 1925.

s&p 500 chart
S&P 500 chart
Trading analytics
S&P 500 (ES) – buy s&p 500 – Entry price: 1925. Goal: 1992. Stop loss: 1885.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

EUR/AUD: waiting for the resumption of growth

The events of recent days, namely, the panic that developed in the stock market led to a sharp increase in demand for the euro. Such dynamics is caused by the fact that at this stage of the common European currency acquires the status of asylum. Earlier, amid loose monetary policy of the European Central Bank, investors are actively credited in euros and used it to buy higher-yielding assets. Now comes the return of risky assets in currency funding. As for the Australian dollar, it looks vulnerable amid signs of cooling of the Chinese economy, with which Australia has strong international relations. It is this contrast and allows you to wait for the further growth of cross EUR/AUD.

In the area of 1.5960 level the pair has formed a support. In the last two days were attempted to overcome and both failed. Thus, when approaching this mark can be activated the “bulls“, pushing the pair to the upper boundary of the established range.

eur/aud chart
EUR/AUD chart

Trading analytics

EUR/AUD   –   buy eur/aud   –  Entry price: 1,5960. Goal: 1,6235. Stop loss: 1,5779.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

GOLD TRADING: growth may resume

Stock markets by storm. Against this background it comes repositioning in favor of safer assets. One traditionally is gold. At this stage, the market is clearly slowing global economy fears provoked by cooling in China. Furthermore, an additional factor that is putting pressure on risky assets in favor uncertainty regarding the timing of the rate hike US Federal Reserve. Plus geopolitical tensions in Korea and the situation is favorable to enter into a long position in gold trading.

In the area of gold 1151.09 level to form a support. In recent days, the metal was down repeatedly in his district, but to go and could not. Thus, the next test without any catalysts, supporting the dollar may again end rebound and eventually lead to more rapid growth.

gold trading chart
Gold trading chart
Trading analytics

Gold (XAU/USD)   –   buy gold   –   Entry price: 1151,09. Goal: 1168,16. Stop loss: 1141,08.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

Review of August 17-21: a turning point in the market. Forecast for the week August 24 – August 28

Equity markets finished the week on a minor note. China has become the instigator of the fall and the outbreak of panic is not spared neither American nor European benchmarks. This Dow Jones (YM) and Nasdaq (NQ) fell, even though the neutral tone of the minutes of the last meeting of the US Federal Reserve, the publication of which is waiting for the beginning of the hike were revised to a greater extent in favor of December. NASDAQ has lost 7,43%, Dow Jones fell by 5.68%. Hong Kong HSI ended the week with a total of -8.14%, including disappointed weak statistics from China. The German DAX 30 (FDAX) has fallen to levels which are at the beginning of the year, having fallen in price on 9,39%.

The collapse in equity markets boosted demand for safer assets. Against this backdrop, gold has risen in price by 4.09%, rising to the level of 1160.44. Brent crude oil finished the week with a loss of 7.04%. Quotes updated at least 6.5 years, down to the level of 45.07.

The economic data of the last week:

  • The Bank of China has poured 120 billion yuan within the 7-day repo transactions – the maximum volumes to January 2014
  • Germany adopted the third package of aid to Greece in the amount of 86 billion euros
  • Bank of Kazakhstan abolished the binding of tenge to the dollar: the currency plummeted by 26%
  • China PMI Caixin index in production  47.7 lower than forecast 47.1
 Forecast for the week August 24 – August 28
Stock market
Overall, the US economy appears to be quite stable. But fears that the cooling of the Chinese economy will slow down the growth of the global economy do not go unnoticed. Against this background, it is possible that even important American reports will be left without due attention. And next week is planned many interesting releases. In particular, the data on orders for durable goods, an updated report on the growth rate of US GDP data on consumer confidence. Under normal circumstances, a strong statistics could support the benchmarks. But in a panic, most likely, it will cause a short-term pullback. It is also closely monitor the performance of Stanley Fischer at a symposium in Jackson Hole. This event is known that it central bankers often make allusions to his future actions (that at this conference, Ben Bernanke once said about the upcoming program QE2). If the deputy chairman of the Federal Reserve will understand that the controller is set to tighten monetary policy, a drop in US indices can only accelerate. The primary objective of Dow Jones (YM) will mark 15900, Nasdaq (NQ) may aim to reduce the level of 4083 and a further 3990. 

The latest statistics from China indicate a continuing slowdown in the economy of China. Against this background, there were rumors about the possibility of lowering reserve requirements (actual rate is 18.5%, which is quite high by world standards) the Bank of China already next Sunday (August 23). Such a decision can cause a short-term pullback Hang Seng (HSI) in the area of ​​23070 level, but to reverse the downward trend is the regulator’s decision is unlikely to. Therefore, correction, in our view, be regarded as a good entry point into short positions.

Commodity and raw market
Brent crude oil persists in the downward movement. There is still a major influence on the dynamics of black gold have a fear of increasing the imbalance of supply and demand on the world market. We can not say that they are unfounded. Macroeconomic statistics in China continued to witness a slowdown in the industrial sector, which gives reason to expect reduction in energy demand from China, which is the world’s largest importer. At the same time, OPEC countries increased their production to the highest level in 7 years – 32.5 million barrels per day. And Saudi Arabia is on the back of record production also increased its exports by 6.2%.

Plus, it is yet to take into account the fact that Iran is preparing to increase the volume of exports in the case of removal from the sanctions and the situation is really not too optimistic. At this stage, in fact, the main hope of the black gold is a natural growth factor. In the US hurricane season begins and, if they pass along the coast of the Gulf of Mexico, the chances of an upward correction is. Given the oversold asset growth will be waiting and if the commercial stocks in the United States according to the Energy Information Agency reflect the resumption of decline. At the end of the week attention is paid to data from Baker Hughes.

But in order to halt the fall of the oil, it will be necessary to reduce the number of drilling rigs operating for at least 10 – 15 units. In general, the probability of such an outcome is, as of the second quarter of the main slate miners suffered losses. Therefore, the longer oil prices held near the lows, the more likely the beginning of the active preservation of drilling. However, collectively the above mentioned factors can trigger a correction in the Brent area of ​​48.10 level (which last week was seen as a support).

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

COPPER: news from China continue to exert pressure

Copper remains pressurized. Again, the main reason lies in market sentiment with respect to commodities. In particular, negative added fears of further slowdown in the Chinese economy. In particular, the latest data on industrial production reflected the slowdown to 6% per annum against 6.8% a month earlier. This can cause a decrease in demand for copper as the Celestial Empire is one of the world’s largest consumer of red metal. Today’s data PMI Caixin in the industrial sector also signaled a continued cooling in the sector (47.1 against 47.8 a month earlier).

In the district level 2.2650 quotes to form a support. His breakthrough could be a good signal for the resumption of sales of metal. With the passage of this mark the number of short positions may increase dramatically, which will send a quotation on down to the nearest target at 2.1900.

copper futures chart
Copper futures chart

 Trading analytics

Copper HG) – sell copper – Entry price: 2,2650. Goal: 2,1900. Stop loss: 2,3300.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for informational purposes and do not guarantee the results obtained.

Review for August 19: the market needs soothing. Forecast for Thursday, August 20

The situation is complicated for the stock markets leaked from Bloomberg: Agency published a pretty headline hints at the aggressive attitude of the Committee of Representatives. This put pressure on US stocks, however, when the protocol was released, it was too peaceful, making it possible to correct indices.

Now most economists expect the first rate hike in December (60%), while for the September serve only 40%. European and Asian benchmarks suffered losses in tandem all the same concerns about the state of the Chinese economy. Gold surged general fear to $ 1134.64 per ounce. Meanwhile, Brent traded near seven-month low of 46.81 dollars per barrel.

Chart of the day:

gold futures chart
Gold futures chart

Economic data of the previous day:

  • The Bank of China has poured $ 200 billion into the two state bank in an attempt to stabilize the country’s economy. Rumor Sunday Central Bank will reduce rates by 50 basis points
  • Germany adopted the third package of aid to Greece in the amount of 86 billion euros
  • US: July, the volume of building permits 1.119 million against 1.232 million
Forecast for Thursday, August 20
Stock market
The Greek Saga” comes to the finale, or to the intermission, and now the speaker of the German DAX (FDAX) depends more on the concerns about the state of the Chinese stock market. The slowdown in China with a corresponding fall in demand could threaten not had time to recover from the European economy. Nevertheless, the DAX had a good chance to recover again, as the “Greek theme” and the correction after the recent collapse. 
The other day the head of the IMF Christine Lagarde hinted that the fund is willing to write off the debt burden with Athens. Lagarde said that the obligations of Greece are too large for the country to deal with them yourself through the reforms, for which agreements have been reached. If these words are to be implemented in practice at the DAX will be a good chance to recover. However, the current it will clearly fall correction in the coming days, which means the area 10680 – attractive shopping with the immediate goal at around 10860.
Commodity and raw market
Brent was crushed by increasing the weekly index of commercial oil reserves in underground storage facilities of the United States that sent the asset below 48.00, but already there is tripped technical history – redundant warrant at the breakdown of the January low. However, a further drop is increasingly clear: The economic situation today is far from what we saw in the crisis of 2008, namely at the level of 2008 is now pushing asset. If a strong support around 45.60 will be passed, then the path only at 39.60.  

And this is unlikely to allow oil producers: shale projects can not exist in such levels. In the short term there is another factor which can support the demand for oil – approaching “hurricane season“. US National Hurricane Center says 60% chance of a tropical storm in the next two days. If the path of the hurricane will pass near the Gulf of Mexico, this may cause concerns about downtime in oil and, consequently, lead to a surge in demand for correctional Brent. The immediate goal on the way up can become now become a resistance level of 48.60.

Currency market
GBP / USD pair recently demonstrated interesting dynamics that can talk about large-scale change in market sentiment. The beginnings for the strengthening of the pound sterling laid Bank of England Governor Mark Carney, noting the inevitable rate hike. Published on Tuesday, inflation data although confirmed low levels of CPI, but pointed to the positive trend – increase in the index after a long fall. Recall that the labor market and inflation are the two main indicators, which will look at the decision of the Central Bank on the first rate increase. 

If the consumer price index confirms the upward trend in the next month, it could force the Bank of England to behave more aggressively. Today, we call attention to retail sales. Any positive data on current can cause spikes in demand for GBP / USD. The pair almost 8 weeks locked in the range 1,5430-1,5660. If the upper limit of the sample is confirmed, the next targets will be the levels 1.5720 and 1.5790, and the market is talking about the resumption of the bullish trend.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

GOLD: Gold disappointed WGC report

The decision of the Bank of China to devalue the yuan, adopted last week, caused a surge of interest in safe assets, including gold. However, this factor itself is almost “won back” and to the fore once again go the usual catalysts. On the one hand, despite the various rumors until actual evidence that the US Federal Reserve in the near future will refrain from raising rates, which may put pressure on the precious metal. On the other, according to a published report on supply and demand from the World Gold Council, in the 2nd quarter demand for the metal fell by 15% compared to Q1 2015 and by 6% in relation to Q2. 2014. All this has led to an increase in net supply, which can also put pressure on the yellow metal.

In the area of gold 1112.58 level to form a support. In recent days, the metal twice tried to pass, but is unable to. Therefore, if the barrier is overcome, can be activated “bears“, leading to an accelerated decline in quotations metal.

gold charts
Gold charts

Trading analytics

GOLD (XAU/USD)   –   sell gold   –    Entry price: 1112,58. Goal: 1103,49. Stop loss: 1119,94. 
Warning: Profitability in the past does not mean profitability in the future. Any projections are for informational purposes and do not guarantee the results obtained.